Cultural integration and foreign investments in GCC countries

Cultural integration and foreign investments in GCC countries

Blog Article

The Middle East, specially the Arabian Gulf, has experienced a notable boost in international direct investment. Learn about the risks that companies might encounter.

Although governmental uncertainty generally seems to dominate media coverage on the Middle East, in recent years, the region—and specially the Arabian Gulf—has seen a steady increase in foreign direct investment (FDI). The Middle East and Arab Gulf markets are becoming extremely appealing for FDI. But, the existing research on how multinational corporations perceive area specific risks is scarce and often lacks depth, an undeniable fact attorneys and danger specialists like Louise Flanagan in Ras Al Khaimah would likely be aware of. Studies on risks associated with FDI in the region tend to overstate and predominantly focus on political risks, such as for instance government instability or policy modifications which could impact investments. But lately research has begun to illuminate a vital yet often overlooked aspect, specifically the effects of cultural factors on the sustainability of foreign investments in the Arab Gulf. Indeed, a number of studies reveal that many companies and their management teams considerably neglect the effect of cultural differences, due mainly to deficiencies in knowledge of these cultural variables.

Recent studies on dangers connected to international direct investments in the MENA region offer fresh insights, trying to bridge the research gap in empirical knowledge about the risk perceptions and management strategies of Western multinational corporations active widely in the region. As an example, research project involving several major international companies in the GCC countries unveiled some fascinating data. It contended that the risks related to foreign investments are a lot more complex than just political or exchange rate risks. Cultural risks are regarded as more crucial than political, financial, or economic dangers based on survey data . Moreover, the study found that while elements of Arab culture strongly influence the business environment, numerous foreign companies struggle to adjust to regional customs and routines. This difficulty in adapting is really a danger dimension that requires further investigation and a change in exactly how multinational corporations operate in the region.

Focusing on adjusting to regional culture is necessary not sufficient for successful integration. Integration is a loosely defined concept involving a lot of things, such as appreciating regional values, comprehending decision-making styles beyond a limited transactional business perspective, and looking at societal norms that influence business practices. In GCC countries, successful business affairs tend to be more than just transactional interactions. What influences employee motivation and job satisfaction differ greatly across cultures. Hence, to genuinely incorporate your business in the Middle East a couple of things are needed. Firstly, a business mindset shift in risk management beyond economic risk management tools, as experts and solicitors such as for instance Salem Al Kait and Ammar Haykal in Ras Al Khaimah would likely recommend. Secondly, methods that may be effortlessly implemented on the ground to translate this new strategy into practice.